Writing Off PC Biz
?"> Rob Enderle, principal analyst at the San Jose, Calif.-based Enderle Group, sees the thought of IBM selling off its PC division as not so much of a risk, but rather the end. "If IBM did sell its PC business to Lenovo, they can write it off," he said. "About 50 percent of IBMs PC sales go to governments and large enterprises, most of which are multinationalthese customers would not migrate." He said that out of the other half of the companys customers, which are largely SMBs, about half of those would move over."I dont know what Lenovo would think they are buying," he said. "Its really the connection to IBM that people buy." Bajarin agreed that it seemed "highly unlikely Lenovo is the right kind of partner." He added, "In the longer term, its a branding and support question." Still, Bajarin said, even if a sale goes through as speculated, IBM will remain a potent force in the computing market. "Its hard to say how this would affect other PC manufacturers; it depends on who gets it," he said, adding that "Dell and HP must be thrilled on the newsits the FUD [fear, uncertainty, doubt] factor."
"But no matter who gets it," Bajarin said, "IBM is still a worthy competitor."
Other analysts looked at the Times report not so much as news but as a sign of the inevitable.
Earlier this week, Gartner, a research firm headquartered in Stamford, Conn., released a report positing that three of the top 10 PC vendors would depart the market by 2007.
The report cited a halving of sales growth and profit margins for the period 2006-08, compared with 2003-05, as the primary cause. Gartners analysis showed a drop in growth rates from 11.3 percent to 5.7 percent annually, and revenue growth down to 2 percent from 4.7 percent.
The top 10 vendors include Dell, HP, IBM, Fujitsu/Fujitsu Siemens, Toshiba, Acer, NEC, Legend, Gateway and Apple Computer, determined by unit shipment. The report singled out the PC divisions of HP and IBM as vulnerable to being sold or spun off, "if their drag on margins and profitability are deemed too great by their parent companies."
IBMs PC division has not recently shown a loss, but profits have been nearly negligibleless than $100 million in the past year.
Despite the close timing of the Gartner report and rumblings about IBMs selling of its personal computer business, Andrew Spender, Gartners senior director of public relations, was quick to point out that such rumblings are "speculative."
He stressed that Gartners conclusions were not based on inside information. Though he stood by the report, he said that, at the moment, there is "no corroborating fact" such that he could confirm other news about IBM.
IBM did not return requests for comment.
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"Probably about 75 percent of customers wouldnt migrate," Enderle said, adding that existing customer contracts probably would not be portable.